The Trump Crash Comes in July

The Trump administration is urging lawmakers to raise the debt ceiling by the end of July — much sooner than previously expected. And they are not going to be able to do it. You will see why in a second. But I had assumed that once the GOP was back in power in both Congress and the White House that the fights over the debt ceiling would disappear, much like how any meaningful executive oversight or concern about the deficit disappeared. And thus an increase to the debt ceiling would be passed without much fuss or furor.

The early signal from Cohn and Mulvaney that the White House will make concessions for votes in favor of a debt increase is likely to encourage House conservatives to dig in on their demands for steep reductions in spending, complicating the task of passing the measure through both chambers of Congress. The administration would have to win over more Democrats to counter any Republican defections.

The analogy I want to employ here is that the Freedom Caucus is the hostage taker. The hostage: America. There is a gun to America’s head. The Freedom Caucus is going to shoot the hostage unless it gets all the spending cuts it wants. The hostage negotiators in this instance (Mulvaney) not only agree with giving into the hostage taker’s demands but also agreed once that shooting hostages is good.

So you can see where this could all go wrong. The Freedom Caucus holds all the cards here. They will not relent until they get everything they want. And even then, there are some, like Mulvaney, that think it will be a good thing that we default.

Combine that set of parameters with the fact that this deadline is now a month away and no one is talking about it or preparing for it. According to CNBC, administration officials indicated “the deadline could potentially hit during recess or shortly after, leaving lawmakers with no time to pass a bill to raise it. The actual date of the deadline remains unclear and tends to be a moving target.” Politico says Congress was caught flat-footed and is not prepared to act:

The White House request raises the prospect of a bruising fight over the debt limit — not just between Republicans and Democrats but within both parties. The GOP is torn over whether to combine spending cuts with the debt ceiling lift, and Senate Democrats are already signaling they may push for their own concessions since their votes are going to be needed to avoid a devastating government default.

Democrats will not provide any votes for a increase unless we get what we want, such as an assurance that the administration will continue making Obamacare subsidy payments to insurance companies. We have learned well from our Republican colleagues. So the GOP cannot count on any votes from Dems. As we have seen with the AHCA, they can only barely pass a controversial bill on the second try. Here, there will be no second try. They have to get it right on the first try. And I am convinced it won’t happen.